BCR Weekly Outlook 12.3 - 12.9


Posted on: 2018-12-03 (Day) By BCR Weekly Outlook


Key Events for this week 

Time (GMT)

Country

Currency

Event

Previous

Forecast

 

Mon 03/12 15:00

USD

US ISM Manufacturing PMI

57.7

57.8

 
   

ISM’s Purchasing Managers’ Index for the manufacturing sector dropped to 57.7 points in October but the score points to robust growth in the small, yet significant sector. This data provides a hint towards Friday’s Non-Farm Payrolls report.

Tue 04/12 03:30

AUD

Australian Interest Rate Decision

1.5%

1.5%

 
   

The Reserve Bank of Australia left the interest rates unchanged at 1.50% for over two years, and this decision will unlikely be different. Governor Phillip Lowe has hinted that the next move will more likely be to the upside, but an increase is not imminent. The GDP data growth may serve as a hint for the next move.

Wed 05/12 00:30

AUD

Australian GDP

0.9%

0.6%

 
   

The Australian economy enjoyed a rapid clip of growth in Q2: 0.9% q/q. This went hand in hand with other economies’ healthy expansion rates. The land down under releases employment figures only once per quarter, making the release more impactful. It also provides insights into Chinese and global growth. A slower growth rate is likely for Q3.

Wed 05/12 09:30

GBP

UK Services PMI

52.2

52.5

 
   

This data tends to be a significant market mover for the pound. The score stood at 52.2 points in October, a level that represents low growth. The upcoming publication for November may be even lower given the high level of uncertainty around Brexit.

Wed 05/12 13:15

USD

US ADP Non-Farm Payrolls

227K

189K

 
   

Automated Data Processing reported an increase of 227K private sector jobs in the US in October, above the averages. The publication moves markets on its own and also shapes expectations for Friday’s NFP. It is important to note that the two reports are not always well-correlated, at least before revisions.

Wed 05/12 15:00

CAD

Canadian Rate Decision

1.75%

--

 
   

The Bank of Canada raised rates to 1.75% in October and also delivered a hawkish message. The upbeat assessment of the BOC is not fully reflected in the price due to the crash of oil prices. Governor Stephen Poloz and his colleagues are set to leave rates unchanged at this event, which does not consist of new forecasts nor a press conference. However, the Ottawa-based institution will likely maintain the hawkish bias and leave the door wide open to an increase in the Overnight Rate in January. Growth, employment, and the signing of the USMCA accord that replaces NAFTA, all support the BOC’s hawkish view.

Wed 05/12 15:00

USD

US ISM Non-Manufacturing PMI

60.3

59.7

 
   

ISM’s report for the services sector remained on the high ground in October, at 60.3 points, pointing to robust growth. November may have seen a slide given growing uncertainty. Also here, the number also works as a hint, the last hint, ahead of the NFP.

Wed 05/12 15:15

USD

Jerome Powell Talks

52.2

52.5

 
   

Fed Chair Powell goes to Capitol Hill and will provide a testimony about the economy and monetary policy. After his recent perceivably dovish comments, every word about interest rates will be closely watched. The central bank is on course to increase rates later this month but the next moves are unclear. The FOMC dot-plot implies three hikes in 2019 but markets are pricing in fewer ones.

Fri 07/12 13:30

USD

US Non-Farm Payrolls

250K

205K

 
 

 

 

 

Dubbed the “king of indicators”, America’s jobs report provides significant input ahead of the last Fed decision of the year. The report for October was quite upbeat, with a gain of 250K positions and year over year wages finally topping 3%, reaching 3.1%. Month over month, salaries were up 0.2%. The jobless rate stood at a low of 3.7%. The report for November may show more moderate job increases.

Fri 07/12 13:30

CAD

Canadian jobs report

5.8%

--

 
   

Canada’s job market is doing OK. Back in October, the unemployment rate fell to 5.8% and 11.2K positions were gained. The months before October saw high volatility. Apart from the headline numbers, it is important to note the composition of job changes: full-time and part-time, as well as the change in wages which has a growing impact on the loonie.

 

 

 

You May Always Concern U.S. Dollar and XAUUSD (GOLD)

 

U.S. Dollar Index (DXY)

 

Weekly OHLC              96.852             97.439             96.535             97.107

Weekly Gain/Loss       0.26%

Key Resistance            97.700             98.050

Key Support                 95.440             94.330

 

As discussed last week, the formation of an impressive Bullish Candle in Weekly Chart has pushed the price higher to 97.439 this week but it failed to sustain its strength and slide to 97.107 before the market closed on Friday. Two-month old ascending trend-channel portrays the US Dollar Index strength to again confront the 97.10 & 97.70 resistances. Currently, it remains to be above EMA200 and it indicates the Bull is still in charge but struggled to break 97.70 level. The level of US Index at this moment is currently respecting the Channel and no breakout occurs last week. The key resistance levels will be at 97.70 and 98.50. At 98.50 could confine the gauge’s further advances if it manages to break this handle. Given the greenback strength fuel the index beyond 98.50, the 99.00 and 100.00 psychological magnets may appear in demand in the near future. While the key support of the index will be at 95.440 and 94.330, any breakout at these levels indicates the trend reversal as the Channel is broken. The Bullish momentum of the index is supported by the recent G20 meeting between the US President, Donald Trump and the President of the Republic of China, Xi Jinping held in Buenos Aires, Argentina when Larry Kudlow, the president's top economic adviser, told reporters that Trump and Xi's meeting went "very well" while Donald Trump said the G20 summit in Buenos Aires was an amazing and productive meeting with unlimited possibilities for both the United States and China. Apparently, the possibility of US index to climb further will increase and it may give positive impact to all the USD-related pairs.

 

 

XAUUSD (Gold)

 

Weekly OHLC              1224.17           1228.9             1211.13           1222.25

Weekly Gain/Loss       -0.16%

Key Resistance            1243.1             1265.9

Key Support                 1196.7             1184.0

 

Gold remains as indecisive movement while it remains below EMA200 in Weekly chart to give the Bear a little fresh air to remain intact. There will be a chance for Gold to move lower to its critical support 1196.7 and 1182.0 if it manages to break the Symmetrical Triangle pattern as shown in the Daily Chart. As it remains below EMA200 in Weekly chart, the gold price is expected to move further south due to the strengthening of US Dollar, however, the news regarding the trade agreement between the U.S. and China should encourage those who bought the dollar as a safe-haven investment to pare positions. This should drive the dollar lower while increasing demand for dollar-denominated gold. In another possibility scenario, any breakout of the Upper Trendline as seen in the Daily chart will revoke the concept of Bearish Symmetrical Triangle pattern and the key resistances at 1243.1 and 1265.9 will be the short-term targets.

 

 

 

More Trading Opportunities

 

EURUSD

 

Weekly OHLC              1.1337             1.1401             1.1266             1.13406

Weekly Gain/Loss       0.03%

Key Resistance            1.1430             1.1500

Key Support                 1.1300             1.1200

 

The EURUSD is currently trading inside a major retracement zone at below 1.15 and above 1.12 handles. It remains to be traded below EMA200 as the trader reaction at this zone will determine the longer-term direction of this pair. The Euro closed lower on Friday is driven by a stronger US Dollar and safe-haven buying helped drive the US Dollar higher. Traders were buying the dollar as protection against an unfavorable outcome from the crucial trade talks this weekend between U.S. President Trump and China’s President Xi Jinping. A favorable outcome is likely to drive the Euro sharply higher this week as Donald Trump said the G20 summit in Buenos Aires was an amazing and productive meeting with unlimited possibilities for both the United States and China. Last week, the EUR/USD settled at 1.1321. The main trend is down according to the Daily Chart as it remains below EMA200 and a trade through 1.1215 will negate the closing price reversal bottom and signal a resumption of the downtrend while a trade through 1.1474 will change the trend to up. This will shift momentum to the upside and the breakthrough at 1.1501 will reaffirm the shift in momentum.

 

 

GBPUSD

 

Weekly OHLC              1.2812             1.2863             1.2725             1.2751

Weekly Gain/Loss       -0.48%

Key Resistance            1.2920             1.3175

Key Support                 1.2700             1.2585

 

The British pound continues to drift lower overall as the formation of descending triangle in the Weekly Chart. In addition, the Brexit issues will give more pressure to the British Pound. The 1.27 remains intact and any breakthrough to this level will lead the market goes down to 1.22 handle underneath. The problems with the Brexit will continue to push this market lower while the voting deadline on December 11, it’s only a matter of time before the market gets disappointed and breaks down. Rallies at this point are still selling opportunities based upon the downtrend line of the triangle as it remains below EMA200 as well, but if it manages to break upper trendline of the triangle, the market might go to the 1.35 handle over the longer-term. However, the possibility for it to happen might not high unless there will be a positive Brexit agreement in the near future. If the price breaks down below the 1.22 handle, then it opens the door to the 1.20 level, which would be more of an extreme negative move.

 

 

AUDUSD

 

Weekly OHLC              0.7232             0.7379             0.7196             0.7373

Weekly Gain/Loss       1.95%

Key Resistance            0.7381             0.7450

Key Support                 0.7233             0.7163

 

AUDUSD has broken through the daily Channel and it is a strong sign for this pair to move further up. The Australian Dollar finished sharply higher last week and the catalyst behind the rally was dovish remarks from the Federal Reserve Chairman Jerome Powell while gains were limited by the concerns over US-China trade relations that sent investors into the safe-haven US Dollar. Over the weekend, conditions changed to more favorable for the Aussie to escalate higher this week.  By taking into consideration of the current market price at this moment, it is likely to test the nearest support at 0.72750 to 0.72330 in order get fresh supplies before moving upward to the resistance levels at 0.7381 and 0.7450. Currently, the gap formed over the weekend after a positive agreement between US-China in the G20 Meeting held in Buenos Aires, Argentina and the price hit the key resistance at 0.7381 level and with the support by a strong fundamental, there will be a good opportunity for the Aussie to climb higher. AUDUSD is traded above EMA200 in Daily Chart and it indicates more rooms for this pair at the North.